We think April’s 211k jobs growth was little more than a solid rebound after a weather-depressed reading in March. We’d expect payrolls to dip closer to the underlying trend, as weaker economic growth in the first quarter combines with a gradual slowdown in jobs growth as the economy flirts with full employment.
Change in Non-farm Payrolls (NFP)
May had three more workdays than April, and as the data doesn’t adjust for this, we could see a weak wage growth reading. But don’t forget, the tight labour market should continue to translate into higher pay. However, the Fed really needs to see 3%+ wage growth before taking the pace of hikes up a notch.
Avg. Hourly Earnings Growth (YoY%)
Unemployment has fallen by almost half a million people since December, and that has seen the unemployment rate tumble from 4.8% to 4.4% in three months. Whilst undeniably a positive story, the household measure does tend to jump around and we suspect we could see a partial correction this time.